The good news is that you’ve found a business that you’re interested in purchasing. Congratulations on embarking on this exciting new chapter in your career! The bad news is that it is currently a seller’s market and you will have to compete against other interested buyers in order to close the deal. Fear not! In this article, we will offer our advice for how best to stand out in the business acquisition marketplace.
1. Relate your skills and experience to the business for sale
The number one way to have a seller take you seriously as a buyer is to take the time to explain to them why you are an ideal fit to take over their business. Remember that buying a business is very similar to a job interview - many candidates apply, and the best person is ultimately selected for the role based on their potential to help the company succeed. Relate your work experience and your education to your prospective role as the leader of the business. Impress the seller with your motivation to make a lasting first impression.
Essentially, an ideal buyer is someone who “fits” with the seller’s industry, compliments their company culture, and shares the seller’s vision for the future of the business.
2. Be persistent and easy to get in touch with
If a company is worth purchasing, most sellers will hear from many potential buyers. Some buyers will express interest initially but will become harder and harder to get ahold of as time goes by. Or worse, they will express interest but are subsequently never heard from again! Transferring ownership from one business owner to another is no small task. Nothing is more frustrating for a business owner than to spend their time interacting with prospective buyers that propose half-hearted inquiries that eat up their limited, and valuable time.
The key to standing out in this regard is simply to be persistent in your efforts to contact the seller and to stay at the forefront of your mind. A good guideline for this is to send them a friendly follow-up message once every two weeks since the last time you spoke.
3. Ask questions - and lots of them!
Asking the right questions demonstrates your ability to think critically about the fundamental dynamics of the company for sale. Business owners are interested in connecting with buyers that will take the time to learn and understand the intricacies behind what makes their company tick. This is why, if you ask the right questions, it can help set you apart. Here is a list of a few suggested questions to help get you started:
- How did you arrive at your asking price?
- What is your reason for selling?
- What are your company’s biggest challenges right now?
- How well documented are the procedures for your business?
- How much does your business depend on a key customer or vendor?
- What will employees do after the sale?
- What skills or qualities do I need to run this business effectively?
- Does your company own or lease your location(s)?
4. Remember that sellers are emotionally invested in their business
While the financial aspect of the sale is important to both the buyer and the seller, it is also important to consider the emotional impact of selling a business. Most business owners are heavily invested in the success of their company, and it matters to them that their life’s work ends up in good hands. Don’t make the mistake of considering the financials as the only item of importance. Demonstrating a personal interest or connection to the business may be all it takes to separate you from other buyers whose outlook may be limited in this respect.
Layne Kasper of the M&A firm Kasper and Associates writes: “Too many prospective buyers have the attitude that the seller must convince them why they should buy the business. But they forget that it is their responsibility to convince the seller to want to sell it to them. That is especially vital if the buyer is hoping the seller will offer financing. By building the relationship, respecting the seller's time and searching for ways to achieve both sides' goals, buyers can engender tremendous goodwill with the seller and increase the odds of a successful transaction.”
And there you have it. You are now armed with the tools necessary to stand out amongst the crowd of other interested buyers. The rest is up to you. Best of luck!